Are smart grids too smart?

Smart grids—loosely defined as electricity networks that provide consumers and utilities with detailed information about electricity use, allowing them to make more informed choices and thereby reduce consumption—are often touted as an easy way to achieve energy efficiency.

And indeed, a pilot program in Fayetteville, NC, resulted in a 20 percent reduction in energy use.

The program, which was joint project of the local utility company and I.B.M. allowed residents to choose their desired monthly energy bill. The utility would then help consumers achieve those goals using previous bills and information provided in online personal profiles consumers create, noting work schedule and desired household temperature among other things.

In a key element of such programs, the utility uses the consumers preferences to determine whether to shut off particular appliances, such as pool pumps, during peak demand. The payoff is huge: eliminating the need for extra power plants.

But is there a privacy issue here, with the municipal utility knowing so much about residents private lives, and even opting to turn household appliances on and off from its offices?

I’m reminded of another “smart” technology that results in lower consumption: GPS systems in vehicles that would allow the government to charge a per-mile-driven tax rather than a simple gas tax. If insurance premiums are also tied to driving miles, drivers almost always respond by driving less. Yet, many drivers have raised concerns about the government quite literally keeping tabs on them. In this case, a reasonable compromise seems to exist: a simple odometer reader would tally miles driven without specifying the when and where.

Should consumers hold out for such a compromise with smart grids? Or is a hit to one’s privacy a reasonable price to pay for relatively painless reductions in energy use?